5 Ways Bitcoin is Disrupting the Gambling Industry
Published on January 30, 2018
Several years ago, Bitcoin was a novelty that was rarely used by the average person. Outside of being used at a few pizza joints and for black market activities, this cryptocurrency didn’t have much popularity.
But times have changed greatly since Bitcoin’s launch in 2009. It’s now used in a wider variety of industries, especially the online gambling sector.
The use of Bitcoin (BTC) has only further increased when considering the recent cryptocurrency boom. Now, more online gamers know of bitcoins than at any other point.
This is good for the online casinos that rely on Bitcoin. But it’s also disrupting internet gaming in different ways.
I’m going to cover 5 ways that Bitcoin is shaking up the gambling industry from both a good and bad perspective.
One of the hardest things about being a Bitcoin gambler is that you never know what your bankroll is going to be worth tomorrow.
Bitcoin and other cryptocurrencies fluctuate wildly on the marketplace. Your bankroll could be worth 0.1 BTC one day, then drop down to 0.08 BTC the next.
Bitcoin is considered the gold standard among cryptocurrencies, because it was the first crypto coin and is easily the most famous.
When BTC drops in value, you can almost guarantee that the “altcoins” will follow. Likewise, the altcoins commonly rise along with Bitcoin.
This means that even those who are gambling with other cryptocurrencies like Ethereum and Litecoin will see their bankrolls fluctuate too.
Nothing illustrates the volatility of Bitcoin gambling better than the month of December 2017.
This coin entered the month valued at less than $11,000. But it quickly climbed to an all time high of nearly $20,000.
Obviously this was great for Bitcoin gamblers, given that their bankrolls nearly doubled. But the ride wasn’t finished yet.
Later in the month, BTC dipped under $13,000. This meant that players saw their funds decrease by 35%.
Anybody who gambles online is somewhat risk adverse. But even the most ardent gamblers stressed out about this roller coaster ride.
Some players would rather stick to gambling on the cyber tables and slot machines, rather than having a side gamble on how much Bitcoin will be worth the following day. Others appreciate this volatility in hopes that their funds will increase in value.
Interestingly enough, online gaming was one of the first industries to dive into the Bitcoin world. This began when Satoshi Dice opened its cyber dollars in 2012 and accepted Bitcoin deposits.
Another big milestone occurred in 2013, when gaming developer SoftSwiss created its own advanced payment processing system for Bitcoin. SoftSwiss, which sells entire casino packages to companies, has since worked with a number of gaming operations to get their Bitcoin sites up and running.
SoftSwiss deals with a lot of offshore gaming sites that operate in unregulated markets. And the same companies are able to accept Bitcoin payments and get around certain countries’banking laws.
A perfect example is the United States, which approved the Unlawful Internet Gambling Enforcement Act (UIGEA) in 2006. This law essentially prevents American banks from handling unregulated online gambling transactions.
But the UK Gambling Commission (UKGC) brought Bitcoin into the regulated gaming industry in 2016. They approved BTC as an acceptable payment solution under the updated License Conditions and Codes of Practice (LCCP).
The LCCP is designed to prevent money laundering or any other shady dealings by an online gaming company. This means that the UKGC decided Bitcoin is reputable enough to be used in one of the world’s most prestigious gaming markets.
The Malta Gaming Authority (MGA) –another respected licensing jurisdiction – has been discussing the Bitcoin matter ever since the UKGC’s approval.
Given its acceptance in the UK and the promise of more gaming jurisdictions approving it, Bitcoin has burst into the mainstream internet gambling world.
It’s possible that BTC will become as common as Visa, MasterCard, and Neteller at online casinos, poker sites, and sportsbooks.
Internet gambling sites wouldn’t be so quick to embrace Bitcoin if customers weren’t interested. The reality is that more and more gamblers are using BTC every day.
Here are the main advantages that Bitcoin offers both players and operators when compared to fiat currencies (e.g. USD, GBP, EUR).
One of the biggest reasons why gamblers like Bitcoin and other cryptocurrencies is because the transaction fees are lower.
You’ll pay a small fee in order to accommodate the Bitcoin miners. But these charges are normally much cheaper than those seen with credit cards, eWallets, prepaid cards, and other traditional payment methods.
The reason why Bitcoin charges lower fees is because it’s not run by a central company. Instead, BTC operates on the blockchain, which is a public ledger that records all Bitcoin transactions.
Another selling point on bitcoins is that withdrawals are processed quicker. If you withdraw your money from a Bitcoin casino, you can normally expect the money to hit your wallet in 1 3 hours.
Contrast this to another popular cashout method in eWallets. When you withdraw funds using Neteller, Skrill, or PayPal, it requires third party verification from the company itself.
The end result is that you can end up waiting two or more days for money. Bitcoin, on the other hand, doesn’t require third party verification or ask questions about the nature of your transactions.
Online gaming sites also enjoy Bitcoin for a couple of main reasons.
First off, offshore sites don’t have to obtain licensing to operate a Bitcoin gambling site. The reason why is because and central governments and banks don’t control this cryptocurrency.
Companies still need to be licensed in regulated markets like the UK, France, Italy, Spain and so forth. But operators can operate in unregulated markets by accepting Bitcoin.
Another benefit for gambling operators is that all Bitcoin transactions are final. This means there are no chargebacks to deal with for internet gaming companies.
Given that Bitcoin isn’t controlled by a government or central bank, it’s very popular in offshore markets. Some online casinos, poker sites, and sportsbooks even base their entire operation around BTC.
This is good for players who live in unregulated markets like Canada and the US, where they don’t have as many options as other countries.
Bitcoin gambling sites allow both operators and players to act with more anonymity.
This isn’t to say that BTC transactions are completely anonymous, as is commonly believed. But the transactions are harder to track when compared to credit cards and eWallets.
In order to crack down on this, certain governments have altered their internet gambling regulations to take aim at Bitcoin. This includes the Czech Republic, Poland, and the Netherlands.
Here’s a look at how each of these countries have recently changed their online gambling laws:
Considering the UK’s forward way of approving Bitcoin, it’s insane to see other countries are railing against it. But hopefully these attitudes change in the near future, because this cryptocurrency isn’t going anywhere.
Cryptocurrency trading is often called a gamble by those who trade in traditional stock markets. The reason why is because of the volatility associated with Bitcoin and other crypto coins.
Investing and cryptocurrency is isn’t a complete gamble, such as playing slot machines or roulette. Instead, it’s more like poker, sports betting, or video poker, where you can use strategy to improve your success rate.
Nevertheless, you do take a fair amount of risk with both short term and long term cryptocurrency investments.
In the first point, I covered how volatile Bitcoin was in December 2017. But what’s amazing is that there are other altcoins that are far more risky than BTC.
In fact, there are currently over 1,000 cryptocurrencies and blockchain companies on the market.
Some investors like to buy a number of risky altcoins based on minimal research. Here are a few points that these types of investors might look at:
The best way to invest in a cryptocurrency is by learning about the team behind it, reading their whitepaper, and understanding the coin’s utility. The fewer of these things that you do, the more you’re gambling.
Back to the original point, some gamblers spend money investing in cryptocurrencies that they would normally pump into online gaming sites.
This is yet another disruptive factor in the industry, because casinos that don’t deal in Bitcoin may see lower volume during the recent cryptocurrency craze.
Bitcoin doesn’t look like it’s ready to completely take over payment solutions for online gaming just yet. But this coin is definitely making a big impact on the industry.
Bitcoin has increased the number of available online gambling sites, lowers transaction fees, and speeds up cashouts.
What’s interesting is that Bitcoin might not even be the end game in cryptocurrency solutions.
Ethereum has now entered the internet gambling space and is used at a small number of casinos. But I expect this to increase greatly in the near future, because Ethereum transactions are even faster and the transaction fees are lower.
Considering how early we are in the cryptocurrency game, it’s entirely possible that one of the newer altcoins could rise to the level of Bitcoin and Ethereum.
I’ve even seen where online gambling sites are working on developing their own blockchain. This means that they could issue their own form of currency, which can be traded on the crypto market.
Long story short, the disruptions that Bitcoin is causing are only the beginning. Expect to see many more changes in the future thanks to blockchain and cryptocurrencies.